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2024 (6) TMI 311 - AT - CustomsConfiscation of imported goods (8 diesel engines and one industrial engine) under Section 111(d) of the CA 1962 when the goods have been re-exported - imposition of redemption fine on the goods that are re-exported - levy of penalty under Section 112(a) when goods are re-exported. When the goods have been re-exported the question of confiscation of goods under Section 111(d) of the Customs Act 1962 do arise or not? - HELD THAT - Goods become liable to confiscation if the Importer or Exporter contravenes any of the provisions of the CA 1962 or any other Act for the time being in force in relation to the importation and exportation of goods. In this case the goods were imported in contravention of the provisions of the EPR 1986. They were hence prohibited goods - The Hon ble Supreme Court in OM PRAKASH BHATIA VERSUS COMMISSIONER OF CUSTOMS DELHI 2003 (7) TMI 74 - SUPREME COURT after examining the term prohibited goods as defined in Section 2(33) of the CA 1962 held The notification can be issued for the purposes specified in sub-section (2). Hence prohibition of importation or exportation could be subject to certain prescribed conditions to be fulfilled before or after clearance of goods. If conditions are not fulfilled it may amount to prohibited goods. The question raised by the appellant that when the goods have been re-exported the question of confiscation of goods under Section 111(d) of the CA 1962 does not arise is like putting the cart before the horse. Confiscation of offending goods under section 111(d) is an action precedent to allowing the same to be redeemed under section 125 of the CA 1962. The permission for export of prohibited goods that have been confiscated and redeemed is an administrative order emanating from the importers request for re-export of the goods and is not flowing from Section 125 of the CA 1962 - When goods are imported in breach of statutory provisions Section 111(d) of the CA 1962 squarely applies as the goods become offending goods liable for confiscation. Confiscation of goods in the situation of a statutory breach by imported prohibited goods is not discretionary. An order permitting re-export of goods is sequentially a separate process which would come into play only after the importer redeems the confiscated goods. Simply because the decision is bundled along with a quasi-judicial order will not change the sequence of events. This being so confiscation of goods under Section 111(d) of the CA 1962 is a must before the administrative permission for the export of the said goods is given at the administrative discretion of the Proper officer. Appellants averment in this regard are hence rejected. No redemption fine is imposable on the goods that are re-exported - HELD THAT - Once the offending goods are confiscated the title of the goods comes to be held by government and the mechanism for the importer to get back possession of the goods is by paying a redemption fine as decided by the Proper Officer. Hence the goods can only be taken repossession of with title by the importer if he pays a fine - The appellant has stated that it is a settled position of law that no redemption fine is imposable on the goods that are to be re-exported. We have earlier seen that for the Proper Officer to allow the redemption of prohibited goods is part of his discretionary jurisdiction. No court has laid down the law that prohibited goods imported without authorization are to be released for re-export without payment of redemption fine. Such a stance would only encourage importers smuggling / making improper import of goods to take a chance with the law and if caught request for re-export of the offending goods without a fine. It would also be discriminatory that for the same offence the intended nature of clearance of the confiscated goods would determine the imposition of fine i.e. if the offending goods are cleared for home consumption fine is to be imposed and if the importer requests for its export no fine can be imposed. The position is legally untenable - The appellants averments in this regard are hence rejected. No penalty under Section 112(a) cannot be imposed when goods are re-exported - HELD THAT - A penalty is the result of a breach of statutory duty. The main object behind the imposition of penalty is deterrence. Re-export of the goods does not cure the breach of statutory duty already committed. While a fine is imposed on the redemption of offending goods imported in breach of law a penalty is levied on a person responsible for the breach of statutory duty. No interfere should ordinarily be made by an appellate body in the discretionary order passed by a lower authority just because another view might be possible except on grounds of mala fides or extreme arbitrariness. No such ground has been made out in this case. Hence this plea also does not have any merit and is rejected. The impugned order is upheld and the appeal filed by the appellant is rejected.
Issues Involved:
1. Confiscation of goods u/s 111(d) of the Customs Act, 1962. 2. Imposition of redemption fine on re-exported goods. 3. Imposition of penalty u/s 112(a) when goods are re-exported. Summary: Confiscation of Goods u/s 111(d) of the Customs Act, 1962: The appellant imported eight diesel engines and one industrial engine, which were found non-compliant with the Environmental Protection Rules, 1986. The adjudicating authority confiscated the imported engines u/s 111(d) of the Customs Act, 1962, as they were considered 'prohibited goods' due to the lack of requisite certificates. The Supreme Court in M/s Om Prakash Bhatia Vs. Commissioner of Customs, New Delhi [(2003) 6 SCC 161] clarified that goods not meeting import conditions are 'prohibited goods' and liable for confiscation. The Tribunal held that confiscation is mandatory for goods imported in breach of statutory provisions, and the permission for re-export is an administrative decision post-confiscation. Imposition of Redemption Fine on Re-exported Goods: The appellant argued that no redemption fine should be imposed on re-exported goods, relying on various judgments. However, the Tribunal noted that once goods are confiscated, the title vests with the government, and the importer can only reclaim them by paying a redemption fine. The Tribunal emphasized that releasing prohibited goods without a fine is not a valid option and would encourage improper imports. The Tribunal upheld the imposition of redemption fine, referencing the Larger Bench decision in Hemant Bhai R. Patel Vs Commissioner Of Customs [2003 (153) ELT 226 (Tri-LB)] which allows redemption fine even when re-export is permitted. Imposition of Penalty u/s 112(a) When Goods are Re-exported: The Tribunal stated that a penalty is imposed for breaching statutory duty, and re-export does not nullify the breach. The Tribunal held that penalties serve as a deterrent and should not be waived simply because the goods are re-exported. The Tribunal upheld the penalty imposed by the adjudicating authority, citing the principle that appellate bodies should not interfere with discretionary orders unless there is evidence of mala fides or extreme arbitrariness. Judgments: The Tribunal examined various judgments cited by the appellant but found them not applicable to the current case. The Tribunal followed the Larger Bench decision in Hemant Bhai R. Patel, which is binding and supports the imposition of redemption fine and penalty even when re-export is permitted. Conclusion: The Tribunal upheld the impugned order, confirming the confiscation of goods, imposition of redemption fine, and penalty. The appeal filed by the appellant was rejected and disposed of accordingly. (Pronounced in open court on 07.06.2024)
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